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 Post subject: finance helpPosted: Sun, 14 Mar 2010 07:09:17 UTC
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Joined: Sun, 14 Mar 2010 07:05:31 UTC
Posts: 1
Location: CA
A recent edition of the Wall Street Journal reported interest rate of 6%, 6.35%,, 6.65% and 6.75% for three-year, four-year, five-year and six-year Treasury note. According to the unbiased expectations hypothesis, what are the expected one-year rates for year 4, 5 and 6? If the liquidity premium for are 0.05%, 0.10%, 0.12% and 0.15% respectively for year 3, 4, 5 and 6, what are the expected one-year rates for year 4, 5 and 6?

Any help will be appreciated.

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 Post subject: Posted: Mon, 26 Apr 2010 07:13:00 UTC
 Senior Member

Joined: Fri, 3 Nov 2006 11:50:23 UTC
Posts: 69
the one year forward rates can be found with the following equation

for eg to find the expected forward rate for one year after three years the same will be

=7.4%

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